Compliance Program to Avoid Imposition of Civil Monetary Penalty

Mr. Haber is a former Assistant United States Attorney and former Senior Attorney for the Office of Inspector General. Mr. Haber founded the firm in 1984 after leaving federal service and has been servicing healthcare practitioners ever since.

The use of excluded individuals by practitioners and entities within the context of Federal healthcare programs can be a very costly mistake. On July 2, 2008, the Southern Illinois Healthcare Foundation (SIHF) agreed to pay $562,021 for allegedly violating the Civil Monetary Penalties Law (CMPL). The OIG alleged that SIHF employed an individual that SIHF knew or should have known was excluded from participation in Federal health care programs. The Inspector General’s authority to impose such a penalty without a physician ever seeing a jury or civil judge arises from regulations that permit the Inspector General to administratively impose such a penalty with limited recourse to an HHS Administrative Law Judge (ALJ). The ALJ’s decision can only be reversed for lack of substantial evidence to affirm it, only after lengthy and expensive administrative review. “Substantial evidence” sounds like a high standard but, in reality, it is a lower standard than “by a preponderance of evidence.” The latter standard is the one that is required in a civil trial with a jury of your peers.

When an individual has been excluded from the Medicare program, they are precluded from furnishing or even assisting in the furnishing of services under the Medicare program or any other federal program. Regulation 42 CFR § 1001.2 provides that exclusion means that items and services furnished, ordered or prescribed by a specified individual or entity will not be reimbursed under Medicare, Medicaid and all other Federal health care programs until the individual or entity is reinstated by the OIG. The OIG’s interpretation is even more expansive by denying payments to those who do not furnish such services but whose salaries are from Medicare funds, within the context of overhead and administrative costs. A good Medicare Attorney can assist you in understanding these issues.

A key word in the above analysis is “furnished.” What does that have to do with a physician who is lawfully in the Medicare program, has not been convicted of a crime and is not knowingly committing a crime under the program? After all the physician is not doing anything wrong that he or she is aware because he or she has not been excluded from the program and is complying with the program as far as he or she is aware. Physicians should have nothing to be concerned about or should they? Well, regulation 42 C.F.R. § 1000.10 defines the meaning of furnishes. It provides that furnished can also refer to items and services provided by third parties who have been excluded.

In other words, if you have a staff member who you use in part (any guess as to what that can be interpreted to mean) to render services for which you bill under the “incident to” rule, then you are furnishing services indirectly through that individual. If that individual happens to have been excluded from the Medicare program, then you are illegally billing for the services that have been provided (directly or indirectly) for by that excluded individual and those services accordingly are excluded from billing under the Medicare program.

Similarly, leasing services of a technician who has been excluded can cause you some real problems. This brings you to billing for illegal services, which makes you liable under the Medicare’s CMPL program. Medicare’s CMPL program, which is imposed by the Inspector General, provides for such substantial penalties similar to what resulted in Southern Illinois Healthcare Foundation (SIHF), who had to agree to pay $562,021 for allegedly violating the Civil Monetary Penalties Law (CMPL) or face much higher penalties. The specific penalty, which may be imposed for each violation, is based upon the specific nature of the violation but can range from $10,000 and up for each and every act and/or submission of a claim to the protected programs. This is without ever seeing a civil judge except for subsequent and very limited judicial review of an administrative agency’s determination.

SIHF could be you. So, how does a law abiding physician avoid such draconian results? One possible way is to establish a compliance program that would help avoid finding yourself in such a predicament in the first place. Furthermore, if you were to find yourself in such a predicament, having such a proper compliance program helps mitigate imposition of penalties. Such a program will assist you in verifying your employees’ status as well as the appropriateness of your procedures, policies and billings and the implementation of them. An appropriate compliance program not only considers issues such as employee status but also, Stark, Anti-kickback, Coding, Medical Charting, Controlled Substances, and any other issue that can affect the specific practice subject to its scrutiny. Indeed, an appropriate compliance program is tailored to the practice’s specific needs. A good Compliance Program with a good Compliance Attorney not only helps prevent problems before they become problems but a good Compliance Attorney implementing a good Compliance Program helps minimize your problems if an error arises.

Contact Kenneth Haber at this office [tel. 301-670-0016] if you are having problems or if you want to avoid problems.